Nerdy (NYSE:NRDY – Get Free Report) and Gaotu Techedu (NYSE:GOTU – Get Free Report) are both small-cap consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, institutional ownership and earnings.
Analyst Ratings
This is a breakdown of current recommendations and price targets for Nerdy and Gaotu Techedu, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Nerdy | 1 | 9 | 1 | 0 | 2.00 |
| Gaotu Techedu | 1 | 0 | 1 | 0 | 2.00 |
Nerdy presently has a consensus target price of $2.86, indicating a potential upside of 48.63%. Gaotu Techedu has a consensus target price of $7.23, indicating a potential upside of 216.41%. Given Gaotu Techedu’s higher possible upside, analysts plainly believe Gaotu Techedu is more favorable than Nerdy.
Risk and Volatility
Profitability
This table compares Nerdy and Gaotu Techedu’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Nerdy | -19.31% | -47.45% | -32.83% |
| Gaotu Techedu | -26.36% | -37.79% | -19.01% |
Valuation and Earnings
This table compares Nerdy and Gaotu Techedu”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Nerdy | $193.40 million | 1.80 | -$40.17 million | ($0.34) | -5.66 |
| Gaotu Techedu | $417.02 million | 1.42 | -$1.03 million | ($0.57) | -4.01 |
Gaotu Techedu has higher revenue and earnings than Nerdy. Nerdy is trading at a lower price-to-earnings ratio than Gaotu Techedu, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
39.1% of Nerdy shares are held by institutional investors. Comparatively, 48.4% of Gaotu Techedu shares are held by institutional investors. 31.4% of Nerdy shares are held by company insiders. Comparatively, 44.9% of Gaotu Techedu shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Summary
Gaotu Techedu beats Nerdy on 8 of the 12 factors compared between the two stocks.
About Nerdy
Nerdy, Inc. operates platform for live online learning. The company's purpose-built proprietary platform leverages technology, including artificial intelligence to connect students, users, parents, guardians, and purchasers of various ages to tutors, instructors, subject matter experts, educators, and other professionals, delivering value on both sides of the network. Its learning destination provides learning experiences across various subjects and multiple formats, including one-on-one instruction, small group tutoring, large format classes, tutor chat, essay review, adaptive assessment, and self-study tools. The company's flagship business, Varsity Tutors, operates platforms for live online tutoring and classes. Its solutions are available directly to learners, as well as through education systems. The company was founded in 2007 and is headquartered in Saint Louis, Missouri.
About Gaotu Techedu
Gaotu Techedu Inc., a technology-driven education company, provides learning services, educational content, and digitalized learning products in the People's Republic of China. The company offers traditional online academic subject tutoring services that covers academic subjects, such as mathematics, English, Chinese, physics, chemistry, biology, history, geography, and political science for students; non-academic tutoring services; personal interest courses comprising chess learning, family relationships and education, humanities, and science courses; and professional courses primarily for college students and adults preparing for professional qualification exams, such as teacher's qualification, Chartered Financial Analyst designation, Certified Public Accountant designation, and other exams. It also offers admission courses for admission tests and interviews, including national-post graduate entrance examination, civil service examinations, and others; foreign language courses; overseas study related services; and courses to prepare and pass certain language exams for study abroad, such as IELTS and TOEFL. In addition, the company designs and develops course outlines, interactive courseware, practice exercises, and lesson notes; publishes reference books comprising Chinese dictionary, dictionary of idioms, and past exam questions for the college entrance examination; and develops, expands, and upgrades education-centric digital products and solutions, as well as learning apps. Further, it offers books and digitalized auxiliary learning tools, such as smart devices and translation pens; and online tutoring services. The company was formerly known as GSX Techedu Inc. and changed its name to Gaotu Techedu Inc. in June 2021. Gaotu Techedu Inc. was incorporated in 2014 and is headquartered in Beijing, China.
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